Municipal Responses to Fiscal Austerity: The Thai Case

This article discusses the use and determinants of fiscal retrenchment strategies of Thai municipalities during the FY 2009/2010 economic downturn. Based on a survey of over 900 municipalities, the author finds that Thai municipal government did not prepare itself for a declining economy. It mainly employed short-term strategies by cutting down line-item and miscellaneous spending rather than utilizing more fiscally sustained schemes such as increasing the revenue from untapped resources or applying more stringent budgetary control measures. Reasons for the fiscal adaptation were several but mainly stemmed from the declining fiscal conditions during the recession as exhibited by fund balance ratio and debt service payment. The findings indicate that Thai municipalities are running at fiscal risk due to inadequate preparation for economic fluctuation and suggest that a local fiscal surveillance system be put in place.     

Measuring Municipal Fiscal Condition: The Application of U.S.-Based Measures to the Context of Thailand

This research attempts to apply U.S.-based measures in order to examine municipal fiscal conditions in Thailand. Fourteen municipal governments located in the central and eastern regions of the country are explored, utilizing data from FY 2001 to 2006. The findings show that the selected measures of revenue-raising capacity and expenditure provide a sensible picture of Thai municipal fiscal conditions when compared to U.S. cities during past decades. Large, highly populous central cities as well as semi-rural, residential areas are fiscally weak. By contrast, suburban and industry-based cities are fiscally healthy. This study provides a foundation for the design of intergovernmental transfer systems that takes into account the local fiscal conditions and helps to extend the external validity of existing analytical tools.